EMI Claiming Financial Improvements
July 15, 2008 at 5:32 AM (PT)
EMI's private equity boss GUY HANDS has claimed early success in his plans to turn the company's fortunes around, reporting a £100m improvement in the recorded music division's quarterly profits, reports U.K.'s THE GUARDIAN. HANDS, whose company TERRA FIRMA bought EMI last year for £3.2bn, told staff that EMI MUSIC reported earnings of £59.2m in the three months to the end of JUNE, against a loss of £45.1m in the same period last year. He said revenue in the quarter had risen by 61% to £288.1m.
"As we all know, the recorded music business is extremely volatile and we cannot count on future quarters always being this good," HANDS wrote in the internal company memo.
HANDS pointed to efficiencies in the marketing and promotion budget, and to a reduction in the number of unsold CDs from 42% of gross physical sales last year to just 16%.
He is looking to make further savings from a restructuring involving 1,500 to 2,000 job cuts. HANDS believes EMI's recorded music business -- far less lucrative than the music publishing side of the business -- must slash costs aggressively to survive in a world of falling CD sales and illegal downloading.
He will become non-executive chairman later this year, after the appointment of ELIO LEONI-SCETI to head EMI MUSIC.